US unemployment aid applications fall to 377K

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WASHINGTON (AP) - The number of people applying for U.S. unemployment benefits fell last week for the first time in five weeks. But the drop suggests only modest job growth after three months of weak hiring.

The Labor Department said Thursday that applications for weekly benefits dropped by 12,000 to a seasonally adjusted 377,000. That's down from an upwardly revised 389,000 the previous week.

The four-week average, a less volatile measure, rose by 1,750 to 377,500, the highest level in a month.

Applications are a measure of the pace of layoffs. When claims dip below 375,000, it typically suggests hiring is strong enough to reduce the unemployment rate. They have hovered near that level for most of the year after declining sharply last fall.

"Although the labor market appears to have stabilized, and is stronger than it was in 2011, it is not particularly robust," Steven A. Wood, chief economist at Insight Economics wrote in a note to clients.

The government last week reported that employers added just 69,000 jobs in May, the fewest in a year. The unemployment rate rose to 8.2 percent from 8.1 percent in April.

Job growth averaged a decent 252,000 a month from December through February. That helped lower the unemployment rate from 9.1 percent in August.

But hiring has slowed in the past three months to an average 96,000 a month.

The number of people receiving benefits is falling, partly because extended benefit programs are ending in many states. About 6 million people received benefits in the week ended May 19, the latest data available. That's a drop of 167,000 from the previous week.

The economy is still struggling three years after the recession officially ended in June 2009. Wages haven't kept up with inflation, pinching consumer spending. State and local governments have continued to shed jobs.

The government reported last week that the economy grew at a sluggish annual rate of 1.9 percent the first three months of 2012, which is consistent with monthly job growth of around 90,000.

The United States has regained less than 3.8 million, or 43 percent, of the 8.8 million jobs lost during and immediately after the recession.

There have been some signs this week that hiring could improve.

A Labor Department report Wednesday suggested that companies may have to start hiring if business picks up: U.S. worker productivity fell by the largest amount in a year from January through March. The drop signals that companies are struggling to squeeze more out of their existing staffs.

And the Federal Reserve issued an update economic report Wednesday, saying that the economy grew modestly across most of the United States this spring. The Fed survey shows growth in each of its 12 bank districts from April 3 through May 25. Growth picked up in 10 districts. It was steady in the Boston district and slowed in the Philadelphia region.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.